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Income Tax in Oman: Does It Apply to Individuals? (2025 Guide)
Income Tax in Oman: Understanding the Evolving Landscape (2025)
For decades, one of Oman’s defining economic characteristics, and a significant draw for expatriates and investors, has been the absence of a general personal income tax. Unlike many nations where individual earnings are subject to direct taxation, salaries, wages, and personal incomes of both Omani citizens and foreign residents have historically remained untaxed. This unique fiscal policy has contributed significantly to Oman’s appeal as a destination for living and working.
However, the Sultanate’s commitment to fiscal sustainability and economic diversification, outlined in Oman Vision 2040, is ushering in a new era for its tax system. A landmark development has introduced the concept of Personal Income Tax (PIT), set to become effective in January 2028. This crucial change targets specific high-income Omani tax residents, signaling a nuanced shift in Oman’s approach to individual taxation. For businesses and individuals alike, understanding this evolving landscape – the current reality and the future implications – is paramount for informed financial planning.
As global tax landscapes shift, professionals and investors alike are asking: “Does Oman impose income tax on individuals?” For expatriates and business owners working or investing in the Sultanate, understanding Oman’s income tax framework is crucial for compliance, financial planning, and assessing long-term residency.
This 2025 guide breaks down Oman’s stance on personal income tax, how it applies (or doesn’t) to individuals, and what the future might hold.
Is There Income Tax on Individuals in Oman?
As of 2025, Oman does not levy a personal income tax on salaries, wages, or freelance income earned by individuals — regardless of nationality.
✅ Key Highlights:
No tax on employment income
No capital gains tax on individuals
No inheritance or wealth tax
No social security tax for expatriates (only for Omani nationals)
This zero personal income tax policy has made Oman one of the most attractive tax havens in the region for skilled professionals and high-net-worth individuals.
Who Is Considered an Individual Taxpayer?
While individuals aren’t taxed directly, it’s important to understand when personal income could potentially fall under Oman’s business tax regime.
You are NOT subject to individual income tax if:
You’re employed under a standard labor contract.
You receive a salary from an Omani employer.
You do not operate a formal business.
You MAY be taxed under corporate tax rules if:
You operate as a sole proprietor or own an establishment generating business income.
You’re engaged in independent activities considered “commercial” in nature.
Your income is derived through a legal entity (even if small or individual-run).
When Could an Individual Be Taxed in Oman?
Oman’s Income Tax Law applies to entities, not individuals — but there are edge cases where individuals effectively fall under corporate tax provisions:
1. Freelancers and Consultants
If an individual operates without forming a company but earns business income, they may be treated like a taxable business under Oman’s 15% corporate tax regime.
2. Sole Proprietorships & Establishments
Even small, single-owner businesses are taxed on profits. While it’s “personal income,” it’s classified as business income and taxed accordingly.
3. Investment Income (Business-Linked)
While capital gains and dividends for individuals are typically not taxed, if such investments are tied to a business entity or used in trade, tax rules apply.
Expatriates: Are You Taxed in Oman?
Oman remains a tax-free jurisdiction for expats in salaried roles. There is:
No payroll tax
No expatriate income tax
No requirement to file personal income tax returns
This offers a significant financial advantage over countries like the UK, India, or Canada, where global income is taxed.
However, expats should be aware of:
Home country tax obligations (if applicable)
Double taxation treaties that affect global reporting
Any foreign income declarations they may need to make
Expatriates: Are You Taxed in Oman?
Oman remains a tax-free jurisdiction for expats in salaried roles. There is:
No payroll tax
No expatriate income tax
No requirement to file personal income tax returns
This offers a significant financial advantage over countries like the UK, India, or Canada, where global income is taxed.
However, expats should be aware of:
Home country tax obligations (if applicable)
Double taxation treaties that affect global reporting
Any foreign income declarations they may need to make
Social Security Contributions: Only for Omani Nationals
Only Omani citizens are subject to social insurance deductions on salaries:
Employers must contribute 11.5%
Employees contribute 7%
Expatriates are fully exempt, leading to higher net take-home salaries.
Does Oman Plan to Introduce Income Tax for Individuals?
Yes — but not yet implemented.
Oman has publicly discussed introducing a personal income tax as part of its Vision 2040 economic diversification plan and fiscal sustainability goals. Key updates:
In 2020, the Ministry of Finance proposed income tax on high-income individuals
IMF encouraged phased implementation for non-oil revenue generation
The Oman Tax Authority (OTA) has hinted at ongoing internal evaluations
As of 2025, no formal law or enforcement exists
If introduced, income tax is expected to:
Apply only to high-income earners (threshold yet to be defined)
Possibly be progressive in nature
Include exemptions for middle- and lower-income workers
Business Owners & Small Traders: Tax Considerations
If you’re running a business under your name, even without a company setup, the corporate tax system applies.
Tax rate: 15% on net profits
You must file annual tax returns via OTA’s e-tax platform
Certain small businesses may qualify for Small Business Exemption Scheme
The distinction between personal and business income is not recognized in Oman’s tax law. All income earned through commercial means is taxed.
How Does Oman Compare with Other GCC Countries?
| Country | Personal Income Tax | Notes |
|---|---|---|
| Oman | ❌ No | Corporate tax only on businesses |
| UAE | ❌ No | Corporate tax started in 2023 |
| Saudi Arabia | ❌ No | Zakat applies to Saudis |
| Qatar | ❌ No | Corporate tax for foreign firms |
| Kuwait | ❌ No | Citizens pay social security only |
| Bahrain | ❌ No | 100% tax-free for individuals |
Oman remains a no-income-tax country in line with other Gulf states, but future changes are possible.
The Current Landscape (Pre-2028): No General Personal Income Tax
As of 2025, and until the end of 2027, the answer to the question “Does Income Tax apply to individuals in Oman?” is generally no.
No Tax on Salaries & Wages: Individuals working in Oman, whether Omani nationals or expatriates, currently do not pay income tax on their salaries, wages, bonuses, or other employment-related benefits. This remains a significant advantage for those considering employment or residency in the Sultanate.
Historical Context: This policy has been a cornerstone of Oman’s economic model, aiming to attract foreign talent and foster a high quality of life for its citizens.
Social Security Contributions: While not income tax, it’s important to note that Omani nationals employed in the private sector (and their employers) are subject to mandatory social security contributions to the Public Authority for Social Insurance (PASI), covering retirement, disability, and other benefits.
This tax-free individual income environment has been a key factor in Oman’s appeal as a cost-effective and attractive destination for professionals and families.
The Upcoming Change: Personal Income Tax (PIT) from January 1, 2028
A pivotal shift in Oman’s tax policy was announced with the issuance of Royal Decree No. 56/2025 in June 2025, introducing a Personal Income Tax. This marks a significant step in the government’s efforts to diversify revenue sources beyond oil and gas and enhance fiscal resilience.
Here are the key details you need to know about Oman’s new Personal Income Tax:
Effective Date: The Personal Income Tax law will come into force on January 1, 2028. This provides businesses and individuals with ample time to prepare for the change.
Applicability: Crucially, this new tax is designed to apply exclusively to high-income Omani tax residents.
This means it primarily targets Omani citizens who meet specific income and residency criteria.
Expatriates’ salaries and wages are explicitly excluded from the scope of this new Personal Income Tax. This is a vital point for the large expatriate workforce in Oman.
Tax Rate: A flat rate of 5% will be applied to the taxable income.
Taxable Threshold: The tax will only apply to the portion of annual income that exceeds OMR 42,000 (approximately USD 109,200). Income below this threshold will not be subject to PIT.
Purpose: The introduction of PIT is part of Oman’s broader strategy for fiscal sustainability and economic diversification, aiming to generate non-oil revenues and reduce reliance on hydrocarbon resources. It aligns with global trends of modernizing tax systems.
This targeted approach ensures that the impact is limited to a specific segment of the Omani population, while maintaining the country’s competitive edge for international talent.
What is Taxed in Oman (Relevant to Individuals & Businesses)?
While a general personal income tax on salaries has been absent (and will remain so for expatriates), Oman has a well-established tax regime for businesses and certain other income streams. It’s essential to distinguish these from personal income tax:
Corporate Income Tax (CIT):
Applicability: This is the primary direct tax on businesses in Oman. All companies and Permanent Establishments (PEs) of foreign entities operating in Oman are subject to CIT.
Rate: The standard corporate income tax rate is 15% on taxable profits, with some exemptions for specific types of businesses or certain free zone entities.
Relevance to Individuals: If an individual (whether Omani or expatriate) operates a business as a structured legal entity (e.g., a Limited Liability Company – LLC), the profits of that entity are subject to CIT at the company level, not personal income tax.
For Omani Sole Proprietors: If an Omani national operates a sole proprietorship, the business income is typically treated as individual income. From 2028, if this income (combined with other sources) exceeds OMR 42,000 annually, it will be subject to the new 5% PIT.
For Expatriate Sole Proprietors: If an expatriate operates a sole proprietorship, their business income would typically be subject to Corporate Income Tax (15%) as per Omani tax law, as it’s viewed as business activity carried out by a resident taxable person.
Withholding Tax (WHT):
Applicability: WHT is a tax deducted at source on certain types of income (e.g., royalties, management fees, service fees, specific dividends, interest) paid by Omani entities to non-residents who do not have a PE in Oman.
Rate: Generally 10%, but can be reduced by Double Taxation Treaties.
Relevance to Individuals: This tax applies to specific cross-border payments, not the salaries or general personal income of individuals working in Oman.
Value Added Tax (VAT):
Applicability: Introduced in April 2021, VAT is a consumption tax levied on the supply of most goods and services in Oman.
Rate: Standard rate of 5%.
Relevance to Individuals: While businesses are responsible for collecting and remitting VAT to the Oman Tax Authority (OTA), the economic burden of VAT is ultimately borne by the end consumer through higher prices.
Excise Tax:
Applicability: Levied on specific goods deemed harmful to human health or the environment (e.g., tobacco products, energy drinks, carbonated drinks, alcohol).
Relevance to Individuals: This is a consumption tax borne by individuals when purchasing these specific goods.
Customs Duties:
Applicability: Tariffs imposed on imported goods.
Relevance to Individuals: Affects the final price of imported consumer goods.
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Defining Tax Residency in Oman for Individuals
While the new PIT law specifically refers to “Omani tax residents,” the general concept of tax residency is important for various tax purposes (e.g., Double Taxation Treaties). For individuals, tax residency in Oman is typically determined by:
Physical Presence: An individual is generally considered a tax resident in Oman if they are present in the Sultanate for a period of 183 days or more during a tax year (which is the calendar year).
Intent to Reside: Even if physical presence is less than 183 days, an individual might be considered a resident if their “habitual abode” is in Oman, or if their “centre of vital interests” (personal and economic ties) is in Oman, indicating an intention to reside there.
However, for the specific applicability of the new PIT from 2028, the law currently highlights “Omani tax residents,” suggesting a primary focus on Omani nationality or long-term Omani residency status. Further executive regulations are expected to provide more precise definitions.
Implications for Individuals in Oman (Pre and Post 2028)
The introduction of PIT, even if targeted, has different implications for various groups:
For Expatriates: Your salaries, wages, and other employment income will continue to be tax-free under the new Personal Income Tax law from 2028. This maintains Oman’s competitive edge in attracting and retaining international talent. Expatriates operating businesses as legal entities will continue to be subject to Corporate Income Tax at the entity level, and those receiving specific payments from Omani sources (like royalties) may be subject to Withholding Tax.
For Omani Nationals (High-Income Earners): From January 1, 2028, Omani tax residents whose annual income exceeds OMR 42,000 will be subject to a 5% tax on the amount exceeding this threshold. This will necessitate careful financial planning and potentially require individuals to file income tax returns for the first time.
For Business Owners (Sole Proprietors & Freelancers):
Omani Sole Proprietors: Business income from a sole proprietorship, being part of the individual’s income, will be subject to the 5% PIT if the total annual income (from all sources) exceeds OMR 42,000 from 2028.
Expatriate Sole Proprietors: Their business income generated in Oman will likely remain subject to Corporate Income Tax (15%) at the business level, similar to how companies are taxed. It is not subject to the new personal income tax.
Strategic Integration with Setup in Oman Services for Tax Clarity
While Oman’s tax landscape for individuals is undergoing a significant, albeit targeted, change, ensuring clarity on your personal and business tax obligations is paramount. Setup in Oman offers a range of services that provide the foundational support for navigating this environment:
Company Formation: For entrepreneurs in Oman, especially those establishing sole proprietorships or companies, understanding the tax implications of your business structure is crucial. Our Company Formation services ensure your entity is correctly set up with the Ministry of Commerce, Industry, and Investment Promotion (MoCIIP), providing the clarity needed to determine whether your income falls under corporate tax or the new personal income tax regime.
Investor Visa & Work Visa: Your residency status directly impacts your tax obligations. Our Investor Visa and Work Visa services ensure that you and your key personnel have the legal residency required to operate in Oman. We can provide general guidance on how different visa types might relate to your tax residency status, particularly in the context of the upcoming Personal Income Tax for Omani residents.
Corporate Bank Account: Maintaining clear separation between personal and business finances is a tax best practice. Our assistance with opening your corporate bank account in Oman facilitates proper accounting, which is essential for understanding your taxable income, whether it’s for corporate tax on your business entity or for personal income tax on your high-earning Omani individual income from 2028.
PRO Services & Tax Liaison: While not direct tax advisors, our comprehensive PRO services are invaluable for general compliance. We can assist with general government liaison and ensure you have the necessary documentation for any future tax-related queries. We also act as a first point of contact, connecting you with specialist tax advisory firms in Oman when detailed personal or corporate tax planning is required.
Conclusion: Navigating Oman’s Evolving Tax Horizon
Oman’s tax system, particularly concerning individual income, is at an interesting juncture. For expatriates, the enduring benefit of tax-free salaries continues, providing a significant financial advantage. For high-income Omani tax residents, the introduction of Personal Income Tax from 2028 marks a notable shift towards a more diversified revenue model for the Sultanate.
This evolving landscape underscores the importance of staying informed and seeking professional guidance. Whether you are an individual earning a salary, a sole proprietor, or a business entity, understanding how these tax regulations apply to your specific circumstances is crucial for effective financial planning and compliance.
Do you need clarity on how Oman’s income tax changes might affect you or your business?
Partner with Setup in Oman. We provide the foundational expertise for establishing and operating your presence in the Sultanate, ensuring you are well-positioned to navigate the current and future tax environment. Let us help you understand your obligations and streamline your compliance journey in Oman.
Contact Setup in Oman today for a consultation and gain the clarity you need on income tax in Oman.
Partner with Us
Contact Setup in Oman today for a consultation and gain the clarity you need on income tax in Oman.
Defining Tax Residency in Oman for Individuals
While the new PIT law specifically refers to “Omani tax residents,” the general concept of tax residency is important for various tax purposes (e.g., Double Taxation Treaties). For individuals, tax residency in Oman is typically determined by:
Physical Presence: An individual is generally considered a tax resident in Oman if they are present in the Sultanate for a period of 183 days or more during a tax year (which is the calendar year).
Intent to Reside: Even if physical presence is less than 183 days, an individual might be considered a resident if their “habitual abode” is in Oman, or if their “centre of vital interests” (personal and economic ties) is in Oman, indicating an intention to reside there.
However, for the specific applicability of the new PIT from 2028, the law currently highlights “Omani tax residents,” suggesting a primary focus on Omani nationality or long-term Omani residency status. Further executive regulations are expected to provide more precise definitions.
Implications for Individuals in Oman (Pre and Post 2028)
The introduction of PIT, even if targeted, has different implications for various groups:
For Expatriates: Your salaries, wages, and other employment income will continue to be tax-free under the new Personal Income Tax law from 2028. This maintains Oman’s competitive edge in attracting and retaining international talent. Expatriates operating businesses as legal entities will continue to be subject to Corporate Income Tax at the entity level, and those receiving specific payments from Omani sources (like royalties) may be subject to Withholding Tax.
For Omani Nationals (High-Income Earners): From January 1, 2028, Omani tax residents whose annual income exceeds OMR 42,000 will be subject to a 5% tax on the amount exceeding this threshold. This will necessitate careful financial planning and potentially require individuals to file income tax returns for the first time.
For Business Owners (Sole Proprietors & Freelancers):
Omani Sole Proprietors: Business income from a sole proprietorship, being part of the individual’s income, will be subject to the 5% PIT if the total annual income (from all sources) exceeds OMR 42,000 from 2028.
Expatriate Sole Proprietors: Their business income generated in Oman will likely remain subject to Corporate Income Tax (15%) at the business level, similar to how companies are taxed. It is not subject to the new personal income tax.
Strategic Integration with Setup in Oman Services for Tax Clarity
While Oman’s tax landscape for individuals is undergoing a significant, albeit targeted, change, ensuring clarity on your personal and business tax obligations is paramount. Setup in Oman offers a range of services that provide the foundational support for navigating this environment:
Company Formation: For entrepreneurs in Oman, especially those establishing sole proprietorships or companies, understanding the tax implications of your business structure is crucial. Our Company Formation services ensure your entity is correctly set up with the Ministry of Commerce, Industry, and Investment Promotion (MoCIIP), providing the clarity needed to determine whether your income falls under corporate tax or the new personal income tax regime.
Investor Visa & Work Visa: Your residency status directly impacts your tax obligations. Our Investor Visa and Work Visa services ensure that you and your key personnel have the legal residency required to operate in Oman. We can provide general guidance on how different visa types might relate to your tax residency status, particularly in the context of the upcoming Personal Income Tax for Omani residents.
Corporate Bank Account: Maintaining clear separation between personal and business finances is a tax best practice. Our assistance with opening your corporate bank account in Oman facilitates proper accounting, which is essential for understanding your taxable income, whether it’s for corporate tax on your business entity or for personal income tax on your high-earning Omani individual income from 2028.
PRO Services & Tax Liaison: While not direct tax advisors, our comprehensive PRO services are invaluable for general compliance. We can assist with general government liaison and ensure you have the necessary documentation for any future tax-related queries. We also act as a first point of contact, connecting you with specialist tax advisory firms in Oman when detailed personal or corporate tax planning is required.
Conclusion: Navigating Oman’s Evolving Tax Horizon
Oman’s tax system, particularly concerning individual income, is at an interesting juncture. For expatriates, the enduring benefit of tax-free salaries continues, providing a significant financial advantage. For high-income Omani tax residents, the introduction of Personal Income Tax from 2028 marks a notable shift towards a more diversified revenue model for the Sultanate.
This evolving landscape underscores the importance of staying informed and seeking professional guidance. Whether you are an individual earning a salary, a sole proprietor, or a business entity, understanding how these tax regulations apply to your specific circumstances is crucial for effective financial planning and compliance.
Do you need clarity on how Oman’s income tax changes might affect you or your business?
Partner with Setup in Oman. We provide the foundational expertise for establishing and operating your presence in the Sultanate, ensuring you are well-positioned to navigate the current and future tax environment. Let us help you understand your obligations and streamline your compliance journey in Oman.
Contact Setup in Oman today for a consultation and gain the clarity you need on income tax in Oman.
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